Thinking of a Traditional Estate Plan? Think again
Traditional Estate Planning is detrimental to Medicaid Planning - don't make this mistake
Below is an unfortunate scenario that we see every week at our offices;
Jane's parents are aging and her Dad needs to go to a nursing home.
Jane contacts our office to apply for Medicaid benefits to pay her Dad's nursing home bill and during our consultation she says she's not worried about losing her parents house or the investment account to the nursing home costs because the y met with a lawyer 6 years ago for estate planning and that's well past the 5 year look back for Medicaid.
At that time, the lawyer suggested a living Trust for the house and investment accounts.
we have to then inform Jane that the transfers to the living Trust, while adequate for basic estate planning to avoid probate - it does not protect these assets from Medicaid planning
Jane is shocked, she thought for sure that the planning they did would protect the assets when applying for Medicaid.
What happened? Why are the assets not protected?
basic estate planning provides protection from probate only - probate is the legal process necessary to settle a person's estate after they pass. This is the work of the Executor chosen in your Will. this process is lengthy and expensive due to attorney fees and fees to the state and local governments. Avoiding probate is definitely something you want to plan for.
However, sheltering assets from the cost of long term care and form the Medicaid office requires much more in depth asset protection. This type of planning is not done by many estate planning attorneys and even some elder law attorneys don't practice this or are not as well versed in the process as needed to accomplish the goals.
Asset protection for Medicaid and long term care requires the proper use of a well drafted asset protection plan and will involve an Irrevocable Trust. A living Trust is revocable and therefore since it can be changed at any time the assets owned by the Trust will count for Medicaid eligibility purposes.
Fortunately we were able to make some changes, restructure her parents assets and still save 100% of her parents assets AND get her Dad approved for Medicaid.
This is just 1 example. Unfortunately not every situation ends in a happy note. Some families are not able to save the assets they thought would be protected.
Medicaid planning and asset protection planning have many layers and should only be done by a Medicaid financial expert.
When your thinking about estate planning - DON'T forget about Medicaid and Long Term Care planning.
Our office helps thousands of clients reach their goals - contact us today for a FREE review of your estate plan and a FREE consultation for Medicaid and asset protection planning.